Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2019. What do these smart investors think about Infinera Corp. (NASDAQ:INFN)?
Is Infinera Corp. (NASDAQ:INFN) a sound investment now? Investors who are in the know are becoming hopeful. The number of bullish hedge fund bets rose by 3 lately. Our calculations also showed that infn isn’t among the 30 most popular stocks among hedge funds. INFN was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 16 hedge funds in our database with INFN positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action regarding Infinera Corp. (NASDAQ:INFN).
Hedge fund activity in Infinera Corp. (NASDAQ:INFN)
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in INFN over the last 15 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Howard Marks’s Oaktree Capital Management has the largest position in Infinera Corp. (NASDAQ:INFN), worth close to $91 million, comprising 1.7% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, holding a $23.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of Steven Baughman’s Divisar Capital, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, key money managers have jumped into Infinera Corp. (NASDAQ:INFN) headfirst. Oaktree Capital Management, managed by Howard Marks, assembled the most outsized position in Infinera Corp. (NASDAQ:INFN). Oaktree Capital Management had $2.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $1.5 million position during the quarter. The following funds were also among the new INFN investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Mark Broach’s Manatuck Hill Partners, and Eric Singer’s VIEX Capital Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Infinera Corp. (NASDAQ:INFN) but similarly valued. These stocks are Viomi Technology Co., Ltd (NASDAQ:VIOT), Vericel Corp (NASDAQ:VCEL), Omega Flex, Inc. (NASDAQ:OFLX), and Sapiens International Corporation N.V. (NASDAQ:SPNS). This group of stocks’ market values match INFN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VIOT | 3 | 33801 | 0 |
| VCEL | 25 | 199525 | 6 |
| OFLX | 4 | 10420 | -1 |
| SPNS | 7 | 14329 | 4 |
| Average | 9.75 | 64519 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $164 million in INFN’s case. Vericel Corp (NASDAQ:VCEL) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. Infinera Corp. (NASDAQ:INFN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately INFN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on INFN were disappointed as the stock returned -25.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
